Published: Friday, October 4, 2013 at 1:00 a.m.

Last Modified: Thursday, October 3, 2013 at 6:04 p.m.

Vampires and zombies are haunting houses in record numbers across Southwest Florida — and it has nothing to do with Halloween.

Nearly half of the region's bank-owned homes remain occupied by their delinquent borrowers, a breed of properties industry wonks have dubbed "vampire" foreclosures.

At the same time, another wave of "zombie" home defaults that were previously dismissed by courts have come back from the proverbial dead to re-enter the foreclosure process.

These new monsters of the housing market could spook the area's recovery through a sharp increase in distressed listings — dragging on prices that have appreciated 25 percent over the year, a new report indicates.

Even with demand from buyers at their liveliest since the crash six years ago, many in the industry now fear another oversaturation of foreclosures could send the market spiraling back into an eerie chill.

"The people who were saying we're almost out of this, that's just pipe dreams," said David Hicks, an area foreclosure attorney. "Banks are still having trouble processing the dockets they have. And rather than seizing these properties, many banks would rather have someone living there and maintaining it."

There are now 2,937 bank-owned properties that have gone completely through the foreclosure process in the Sarasota-Bradenton-Venice metropolitan area. But with 48 percent of those, the lender has yet to evict the recession-battered borrowers still living in the homes, according to the researcher RealtyTrac Inc.

That leaves an estimated 1,410 new foreclosure listings that are expected to hit the market within the next few months.

The new wave of distressed properties could flood a housing market in Sarasota that carried 2,570 active single-family listings in August — boosting the supply by some 45 percent, records show.

Florida has more of these vampire foreclosures than any other state, with 53 percent of the 84,645 homes now belonging to banks still inhabited by their previous owners, according to RealtyTrac.

Most industry watchers attribute this new measure of shadow foreclosure inventory to banks that are still struggling to comply with the state's new fast-track foreclosure law, along with stringent processing guidelines under the $25 billion national foreclosure settlement.

In many cases, these vampire foreclosures look like normal homes, with owners living there and taking care of the properties — saving banks from maintenance expenses like utilities and lawn care.

But with real estate prices now rising, it's likely the lenders will begin to rush these homes onto the market to take advantage of that inflation, RealtyTrac Vice President Daren Blomquist said.

"We do believe this presents some scariness for the housing market," Blomquist said. "The banks want to cash out on these homes because they can get more for them now than they could have even just a year ago. As they eventually hit the market, it could have an impact on home prices negatively.

"This could really slow down momentum."

New wave of foreclosures

Vampire foreclosures are not the only eerie threat that could grip the housing market this fall.

A growing number of foreclosures that were tossed during the past few years as a result of lender missteps are now circling back into courts as new default cases.

These "zombie foreclosures" are adding to a backlog of 13,145 pending foreclosure cases that now clog the 12th Judicial Circuit court that covers Sarasota, Manatee and DeSoto counties.

Like the vampire foreclosures, these zombie cases will greatly increase the number of new distressed listings expected to flow through the housing market over the next 12 months, said Jack McCabe, a Florida real estate analyst.

That could help replenish a Realtor inventory level now at decade lows. But it could also chill the rate of recent price growth.

"The banks know the majority of properties that will hit the market over the next year will be of distressed nature," McCabe said. "That gives banks control of the inventory. And up until now, it wasn't in their best interest to release these.

"The people who say the foreclosure crisis is going away don't know what they're saying," McCabe added.

There were an estimated 13,145 pending foreclosure cases in the 12th Circuit as of Aug. 31. While that's down from 14,109 in late June, a total of 737 cases that were dismissed during that time were done without a judge's approval or final court ruling.

That means 52 percent of the cases that were settled during the past two months are expected to resurface once mortgage lenders get paperwork in order. On top of that, another 440 new cases entered the system during that time, according to a Herald-Tribune review of court records.

That trend has been largely consistent since new rules regarding the federal mortgage deal took effect.

Between these recycled zombie cases and the new vampire defaults, many now worry the strengthening foreclosure market will crimp home prices just as the economy has begun to turn the corner.

"We're going to see foreclosures come onto the market for the next three to five years because there's just so many and not enough people to process them," said Drew Peterson, a foreclosure specialist with Re/Max Alliance in Sarasota.

Lull may not last long

The new threats come as foreclosures throughout the area have greatly slowed from the pace during the worst of the recession.

Lenders filed to foreclose on 889 property owners between Sarasota, Manatee and Charlotte counties in August, down 27 percent from July and 21 percent from the same time last year, according to RealtyTrac.

Early stage foreclosures — lis pendens filings — fell even more dramatically, off 36 percent for the month and 62 percent over the year.

But that lull may not last too long.

The slowdown comes as banks are adapting to stringent filing requirements under a new state law aimed at expediting the process — while also abiding by the strict regulations of the $25 billion mortgage settlement inked between five top banks and the government last year.

Lenders may begin to more quickly move foreclosures as they come to grips with the new rules.

But for now, the law designed to speed up the court foreclosure problem is instead slowing them down, said Circuit Court Judge Lee Haworth.

Haworth said that's because the law now requires attorneys to defend their facts and evidence under oath — a major change that has made lenders more careful and provided homeowners with more ammunition in defending their cases.

As a result, Haworth's task force has mostly focused on the older cases that have been languishing around.

"I don't think the legislature realized how hard this would be on attorneys," Haworth said. "It gives a lot of good lawyers pause before they're filing. They're double- and triple-checking documents, and that takes time.

"I frankly think we would have processed cases faster if they never touched the law."

<p>Vampires and zombies are haunting houses in record numbers across Southwest Florida — and it has nothing to do with Halloween.</p><p>Nearly half of the region's bank-owned homes remain occupied by their delinquent borrowers, a breed of properties industry wonks have dubbed "vampire" foreclosures.</p><p>At the same time, another wave of "zombie" home defaults that were previously dismissed by courts have come back from the proverbial dead to re-enter the foreclosure process.</p><p>These new monsters of the housing market could spook the area's recovery through a sharp increase in distressed listings — dragging on prices that have appreciated 25 percent over the year, a new report indicates.</p><p>Even with demand from buyers at their liveliest since the crash six years ago, many in the industry now fear another oversaturation of foreclosures could send the market spiraling back into an eerie chill.</p><p>"The people who were saying we're almost out of this, that's just pipe dreams," said David Hicks, an area foreclosure attorney. "Banks are still having trouble processing the dockets they have. And rather than seizing these properties, many banks would rather have someone living there and maintaining it."</p><p>There are now 2,937 bank-owned properties that have gone completely through the foreclosure process in the Sarasota-Bradenton-Venice metropolitan area. But with 48 percent of those, the lender has yet to evict the recession-battered borrowers still living in the homes, according to the researcher RealtyTrac Inc.</p><p>That leaves an estimated 1,410 new foreclosure listings that are expected to hit the market within the next few months.</p><p>The new wave of distressed properties could flood a housing market in Sarasota that carried 2,570 active single-family listings in August — boosting the supply by some 45 percent, records show.</p><p>Florida has more of these vampire foreclosures than any other state, with 53 percent of the 84,645 homes now belonging to banks still inhabited by their previous owners, according to RealtyTrac.</p><p>Most industry watchers attribute this new measure of shadow foreclosure inventory to banks that are still struggling to comply with the state's new fast-track foreclosure law, along with stringent processing guidelines under the $25 billion national foreclosure settlement.</p><p>In many cases, these vampire foreclosures look like normal homes, with owners living there and taking care of the properties — saving banks from maintenance expenses like utilities and lawn care. </p><p>But with real estate prices now rising, it's likely the lenders will begin to rush these homes onto the market to take advantage of that inflation, RealtyTrac Vice President Daren Blomquist said.</p><p>"We do believe this presents some scariness for the housing market," Blomquist said. "The banks want to cash out on these homes because they can get more for them now than they could have even just a year ago. As they eventually hit the market, it could have an impact on home prices negatively.</p><p>"This could really slow down momentum."</p><p>New wave of foreclosures</p><p>Vampire foreclosures are not the only eerie threat that could grip the housing market this fall.</p><p>A growing number of foreclosures that were tossed during the past few years as a result of lender missteps are now circling back into courts as new default cases.</p><p>These "zombie foreclosures" are adding to a backlog of 13,145 pending foreclosure cases that now clog the 12th Judicial Circuit court that covers Sarasota, Manatee and DeSoto counties.</p><p>Like the vampire foreclosures, these zombie cases will greatly increase the number of new distressed listings expected to flow through the housing market over the next 12 months, said Jack McCabe, a Florida real estate analyst.</p><p>That could help replenish a Realtor inventory level now at decade lows. But it could also chill the rate of recent price growth.</p><p>"The banks know the majority of properties that will hit the market over the next year will be of distressed nature," McCabe said. "That gives banks control of the inventory. And up until now, it wasn't in their best interest to release these.</p><p>"The people who say the foreclosure crisis is going away don't know what they're saying," McCabe added.</p><p>There were an estimated 13,145 pending foreclosure cases in the 12th Circuit as of Aug. 31. While that's down from 14,109 in late June, a total of 737 cases that were dismissed during that time were done without a judge's approval or final court ruling.</p><p>That means 52 percent of the cases that were settled during the past two months are expected to resurface once mortgage lenders get paperwork in order. On top of that, another 440 new cases entered the system during that time, according to a Herald-Tribune review of court records.</p><p>That trend has been largely consistent since new rules regarding the federal mortgage deal took effect.</p><p>Between these recycled zombie cases and the new vampire defaults, many now worry the strengthening foreclosure market will crimp home prices just as the economy has begun to turn the corner.</p><p>"We're going to see foreclosures come onto the market for the next three to five years because there's just so many and not enough people to process them," said Drew Peterson, a foreclosure specialist with Re/Max Alliance in Sarasota.</p><p>Lull may not last long</p><p>The new threats come as foreclosures throughout the area have greatly slowed from the pace during the worst of the recession.</p><p>Lenders filed to foreclose on 889 property owners between Sarasota, Manatee and Charlotte counties in August, down 27 percent from July and 21 percent from the same time last year, according to RealtyTrac.</p><p>Early stage foreclosures — lis pendens filings — fell even more dramatically, off 36 percent for the month and 62 percent over the year.</p><p>But that lull may not last too long. </p><p>The slowdown comes as banks are adapting to stringent filing requirements under a new state law aimed at expediting the process — while also abiding by the strict regulations of the $25 billion mortgage settlement inked between five top banks and the government last year.</p><p>Lenders may begin to more quickly move foreclosures as they come to grips with the new rules. </p><p>But for now, the law designed to speed up the court foreclosure problem is instead slowing them down, said Circuit Court Judge Lee Haworth.</p><p>Haworth said that's because the law now requires attorneys to defend their facts and evidence under oath — a major change that has made lenders more careful and provided homeowners with more ammunition in defending their cases.</p><p>As a result, Haworth's task force has mostly focused on the older cases that have been languishing around.</p><p>"I don't think the legislature realized how hard this would be on attorneys," Haworth said. "It gives a lot of good lawyers pause before they're filing. They're double- and triple-checking documents, and that takes time.</p><p>"I frankly think we would have processed cases faster if they never touched the law."</p>